Flipkart's revised termsheet has a lot of 'hold backs' and 'clauses' that make an all-stock deal 'difficult' to consider for Snapdeal, sources told Moneycontrol.
Snapdeal founders Kunal Bahl and Rohit Bansal have been conducting one-on-one meetings with senior executives including heads of multiple business units to firm up their plans for an alternative path, hinting that the much-talked-about deal with rival Flipkart could have potentially hit a roadblock, according to multiple persons privy to the development.
These meetings have been taking place at least since the last one week.
Snapdeal received two offers from Flipkart for an all-stake acquisition in July. While the first one USD 550 million was way below the e-commerce firm's expectation of USD 1 billion, the second offer that came last week was around USD 900 million.
According to one of the sources mentioned above, it's not a negotiation on just the numbers any more. The term sheet has a lot of 'hold backs' and 'clauses' which make it a really 'difficult deal' now.
"All meetings are happening on how good Plan B can work in favour of Snapdeal. The founders are trying to convince their direct reports on the same. Looks like the Flipkart deal is now in a limbo," said one of the sources mentioned above.
"I think the founders are conservative on sharing anything which has not officially been confirmed. The motive of the meetings broadly has thus been to ensure the employees that if the deal happens — great! If it doesn't happen, the employees shouldn't worry, for they have a plan that they are working on and that they could all pull it together," said another person quoted above.
Employees adjust to uncertainty, plan B in place
As part of this Plan B, the plan is to further cut down the costs which may include another round of massive layoffs affecting around 600-1000 people in the company. It will also see its non-core business — Freecharge and Vulcan 3 being sold separately while the company will look at shutting its warehouses, Moneycontrol reported on June 13.
Meanwhile, the company is also reported to have received another offer from the listed e-commerce website Infibeam. It has been reported that Infibeam's term sheet is likely to have valued Snapdeal at USD 1 billion. Snapdeal didn't respond to an email sent on the matter.
Another person quoted above said that the founders are more likely to be keen on Infibeam, given they will get to retain their positions even post the acquisition. While the talks are on, business seems to be usual in the Gurgaon-based office.
One would be surprised given the amount of uncertainty looming. But according to at least two persons quoted above, different departments are working on multiple initiatives.
"Teams have clear plans for the next few months. Till the time the deal doesn't close, I am going to assume, life is as usual," said one of them.
"We had a brief period of lull when the letter from the founders had come in April. The email went out and people had no clarity. But we have passed that phase now. It has been months and by now we have adjusted to the fact," said the second person quoted above.
In an email to the employees in April, Bahl had indicated that the founders had little control over the developments at the company as the investors had taken most of the decisions in their hands.Snapdeal now continue to witness exists on a routine basis, as and when employees are getting better opportunities. But those lacking that, besides the loyalists are still holding the ground.